Bursa De­riv­a­tives launches en­hanced bond fu­tures

The Sun (Malaysia) - - SUNBIZ -

PETALING JAYA: Bursa Malaysia De­riv­a­tives (BMD) has launched en­hanced fea­tures for the three, five and 10-year Malaysian bond fu­tures, bet­ter known as FMG3, FMG5 and FMGA re­spec­tively.

In a state­ment yes­ter­day, BMD chair­man and Bursa Malaysia Bhd CEO Datuk Seri Ta­jud­din Atan said the en­hance­ment of FMG3 and FMGA are in­tended to make the prod­ucts more ap­peal­ing to in­vestors and hedgers, which were only avail­able for FMG5 pre­vi­ously.

“In ad­di­tion, the ex­tended trad­ing hours of­fer greater flex­i­bil­ity to traders to seize any op­por­tunis­tic mar­ket move­ments,” he added.

The stock ex­change said the en­hance­ment would also cre­ate a “Malaysian Sov­er­eign Bond Fu­tures Curve”, which serves as a bench­mark for lo­cal and for­eign in­vestors to es­ti­mate the im­pend­ing in­ter­est rates while man­ag­ing their phys­i­cal cash Malaysian Gov­ern­ment Se­cu­ri­ties (MGS) ex­po­sures.

Al­most 50% of the MGS con­tracts are for­eign hold­ings, it noted.

The en­hanced fea­tures of the prod­ucts are in three ar­eas: the ex­ten­sion of the close of trad­ing time from 5pm to 6pm for FMG3 and FMGA; fi­nal set­tle­ment price is now de­rived from the vol­ume weighted av­er­age prices mech­a­nism; el­i­gi­bil­ity within the bas­ket of bonds is now widened for FMG3 and FMGA, where the ma­tu­rity range for FMG3 in­creased from a range of two-and-a-half to three-and-ahalf years to two to four years, while FMGA is ex­tended from eight to ten years, to eight to eleven years.

The changes were made af­ter in­dus­try con­sul­ta­tion and ap­proval from the Se­cu­ri­ties Com­mis­sion in July this year. FMG3, FMG5 and FMGA falls within the fi­nan­cial prod­uct cat­e­gory.

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